1. © 2005, Business Process Trends www.bptrends.com 1 Best Practices in the Governance of Business Process Management Paul Harmon Executive Editor Business Process Trends

2. © 2005, Business Process Trends www.bptrends.com 2 The Gradual Revolution in Management Thinking In the aftermath of the Industrial Revolution managers followed Adam Smith, Henry Ford, and Frederick Taylor subdivided tasks to achieve productivity In the Seventies computers were used to reinforce departmental or functional specialization Starting in the Eighties, with Michael Porter, Edwards Deming, and Geary Rummler, the tide began to reverse and managers began to think in terms of value chains and processes In the Nineties IT gurus joined in with Business Process Reengineering, Workflow, and, more recently BPM Systems and executives like Jack Welch promoted Six Sigma Today we are witnessing a shift from management based on departments to management based on processes. For most companies its just begun, but its steadily gaining traction

3. © 2005, Business Process Trends www.bptrends.com 3 Process Integration in Nineties

4. © 2005, Business Process Trends www.bptrends.com 4 Today: Horizontal & Vertical Alignment

5. © 2005, Business Process Trends www.bptrends.com 5 An Aside: Processes Come in Different Sizes

6. © 2005, Business Process Trends www.bptrends.com 6 A Second Aside: Process Change Efforts Vary

7. © 2005, Business Process Trends www.bptrends.com 7 A Third Aside: The Two Major BPM Audiences Business Managers and Six Sigma Practitioners –Architectures – SCOR –Six Sigma Programs –CMM –Process Modeling Tools –Redesign Methodologies IT Managers and Systems Practitioners –ERP Systems –BPM Systems –BAM Systems –Software Development Methodologies

8. © 2005, Business Process Trends www.bptrends.com 8 Some Management Concerns

9. © 2005, Business Process Trends www.bptrends.com 9 Process Management and Organization Management BPM as a Management Philosophy –Senior Executives –KPIs BPM as a Way of Organizing the Company –Middle Managers –Reporting Relationships –BPM Architecture and Dashboards The Management of Specific Processes –Supervisors –Improving Specific Processes –Managing the Employees Executing the Processes

10. © 2005, Business Process Trends www.bptrends.com 10 Three Levels of Governance Executives – Organization Performance & Responsiveness Line and Process Managers – Value Chain/Process Performance and Priorities for Improvement Process Supervisors – Efficient & Effective Organization of Subprocesses and Activities

11. © 2005, Business Process Trends www.bptrends.com 11 An Organization Diagram

12. © 2005, Business Process Trends www.bptrends.com 12 Defining the Key Internal Processes

13. © 2005, Business Process Trends www.bptrends.com 13 Michael Porter’s Value Chain From Michael Porter, Competitive Advantage, Harvard, 1985

14. © 2005, Business Process Trends www.bptrends.com 14 Unisys Corp. Functions and Value Chains

15. © 2005, Business Process Trends www.bptrends.com 15 Defining a Business Process Architecture The key tool for process management A high-level overview of the value chains and key processes that make up the organization An alignment of strategic goals, value chains and key processes A clear-cut way to monitor the performance of the value chains and processes (KPIs) A BP Architecture is NOT an IT EA Architecture

16. © 2005, Business Process Trends www.bptrends.com 16 Available Business Process Frameworks BP Frameworks are often called Operation Reference (OR) Frameworks A BP or OR Framework is a template for a BP Architecture The Supply Chain Council’s SCOR Framework The TeleManagement Forum’s eTOM/NGOSS Framework Hewlett Packard’s Framework Suite The VCOR Initiative

17. © 2005, Business Process Trends www.bptrends.com 17 SCOR MODEL: Level 1

18. © 2005, Business Process Trends www.bptrends.com 18 The Level 1 SCOR Notation

19. © 2005, Business Process Trends www.bptrends.com 19 SCOR’s Level 1 Scorecard

20. © 2005, Business Process Trends www.bptrends.com 20 SCOR Benchmarks Provide Instant ROI

21. © 2005, Business Process Trends www.bptrends.com 21 Process Portfolio Management

22. © 2005, Business Process Trends www.bptrends.com 22 Business Process Outsourcing (BPO)

23. © 2005, Business Process Trends www.bptrends.com 23 Three Levels of Governance Executives – Organization Performance & Responsiveness Line and Process Managers – Value Chain/Process Performance and Priorities for Improvement Process Supervisors – Efficient & Effective Organization of Subprocesses and Activities

24. © 2005, Business Process Trends www.bptrends.com 24 Basic BP Management Model

25. © 2005, Business Process Trends www.bptrends.com 25 Aligning Managers and Measures

26. © 2005, Business Process Trends www.bptrends.com 26 Coordinating the Management of Processes

27. © 2005, Business Process Trends www.bptrends.com 27 Kaplan and Norton’s Balanced Scorecard

28. © 2005, Business Process Trends www.bptrends.com 28 Extending The Balanced Scorecard

29. © 2005, Business Process Trends www.bptrends.com 29 Extending It Further

30. © 2005, Business Process Trends www.bptrends.com 30 A BP Group and a BP Process Most companies that are serious have a business process group to coordinate their efforts and provide special training and mentoring Many companies conclude that process change is its own kind of process and develop and document The Process Change Process in the same way they do other processes.

31. © 2005, Business Process Trends www.bptrends.com 31 An Overview of SEI’s CMM Maturity Model

32. © 2005, Business Process Trends www.bptrends.com 32 Three Levels of Governance Executives – Organization Performance & Responsiveness Line and Process Managers – Value Chain/Process Performance and Priorities for Improvement Process Supervisors – Efficient & Effective Organization of Subprocesses and Activities

33. © 2005, Business Process Trends www.bptrends.com 33 A Process Includes Its Management

34. © 2005, Business Process Trends www.bptrends.com 34 The Level 1 SCOR Notation

35. © 2005, Business Process Trends www.bptrends.com 35 One of Rummler’s Rules 75% of potential improvement you can obtain from a redesigning a process will come from changing the way the process is managed Geary Rummler, Serious Performance Consulting, ASTD Press, 2004

36. © 2005, Business Process Trends www.bptrends.com 36 Rummler’s Human Performance Model Geary Rummler & Alan Brache, Improving Performance, Josey-Bass, 1985

37. © 2005, Business Process Trends www.bptrends.com 37 A More Detailed Human Performance Model

38. © 2005, Business Process Trends www.bptrends.com 38 Rummler’s Rule Applies To All Level’s of Management The biggest problem most organizations face is that they don’t align bonuses and incentives with processes Thus, it is common for employees, supervisors and senior managers to get rewards for behaviors that do not result in improved performance Aligning incentives should be a major goal of every business process change program Jack Welch, the CEO of GE, made 40% of every executive’s bonus dependent on the success of their 6 Sigma program

39. © 2005, Business Process Trends www.bptrends.com 39 SUMMARY The challenge for managers is to learn how to manage business processes We have too many technologies and not enough focus on why we should do BPM in the first place We manage processes to improve corporate performance Companies need to set goals, develop a strategy, and then create a business process organization that can organize and coordinate their BPM resources

40. © 2005, Business Process Trends www.bptrends.com 40 For More Information www.bptrends.com The most comprehensive source of information and analysis on trends, directions and best practices in Business Process Management pharmon@bptrends.com